Paragon comments on the 2021 budget

Richard Rowntree, Managing Director for Mortgages at Paragon Bank, reacts to the 2021 budget announcement and discusses the potential impact on the private rented sector:

“The budget has long been a key date in the calendar for both businesses and individuals, but today’s speech took on extra importance as we hopefully awaited a blueprint for the next phase of the UK’s economic recovery.”

Stamp Duty extension

“After months of speculation, today’s announcement that the stamp duty tax break will be extended will secure property sales worth billions of pounds and offer reassurance to thousands of buyers who have hoped to take advantage of the savings on offer.

“The phased ending will see no duty will charged on the purchase of properties up to the value of £500,00 until 30 June. After this point, the threshold will drop to £250,000 until the end of September before reverting to the pre-pandemic level of £125,000 by the end of October.

“No further conditions on the initiative were announced so my hope is that this tapered ending will help to avoid moving the predicted ‘cliff edge’ on by a few months. It is important that the tax break is concluded in a way that is manageable and provides a level of stability to the market.”

Mortgage guarantee scheme

“The mortgage guarantee scheme will see the Government guarantee a portion of the money banks lend for property purchase and is aimed at encouraging lenders to start offering more 95% loan to value (LTV) mortgages, many of which were withdrawn from the market after being deemed too risky during last year’s elevated economic uncertainty.

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“Support to help people get on the property ladder is clearly a good thing and efforts to avoid people becoming frustrated with their current housing situation should be encouraged.  The current record levels of demand, reducing voids and changing make-up of those that call the PRS home should not be overlooked, however, so it is important for us to work towards a housing model with a focus on increasing the number of good quality, affordable homes where tenures exist equally and people can opt for whatever best suits their needs at the time.

“With the current affordability testing designed in a way to protect both lenders and the customers deemed to have higher exposure to financial shock – evidence exists showing that young people have been some of the hardest hit by the pandemic – banks will need to work closely with policymakers to ensure regulation enables them to support what is a positive move for the housing industry and wider economy.”

Furlough extension

“More broadly, it was encouraging to see the furlough scheme extended. This will offer a lifeline to many of those who have relied on the initiative in order to pay, amongst many other important outgoings, their rent which in turn is vital to the many landlords who have also faced a level of financial hardship as a result of the pandemic.”

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He added: “As is often the case when reacting to policy announcements, there will be differing interpretations and the devil is in the detail. Overall, there are plenty of positives to take from a budget that involved plenty of difficult decisions and it is great to see the property sector continue to be a key facet of the UK’s future prosperity.” 


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